IMF says PH has policy flexibility to counter economic risks

The Philippines has policy flexibility to counter potential economic risks with a more expansionary macroeconomic policy stance, according to the International Monetary Fund (IMF).

The IMF suggests that fiscal stimulus should be directed towards public capital and social spending programs if economic risks materialize.

The Bangko Sentral ng Pilipinas (BSP) has substantial room to lower its policy rate if unexpected negative economic events occur.

The IMF's assessment, part of its annual Article IV Consultation, noted that moderate fiscal stimulus and monetary policy easing are consistent with the economy returning to its potential growth.

The IMF maintained its economic growth forecast for the Philippines at 6.3% for 2020, an improvement from the 5.9% GDP growth in 2019.

While the current expansionary stance provides some insurance against risks, a sharper-than-expected downturn would call for a more expansionary policy.

The IMF also supports legislative initiatives such as further lifting of restrictions on foreign direct investments and reforms in bank secrecy laws to enhance the country's capacity and economic goals.